Every year, inflation figures are announced with reassuring precision, often suggesting that price rise remains contained. Yet across Indian households, the lived experience tells a more complicated story. Families find themselves reworking budgets, postponing purchases, or dipping into savings to meet routine expenses. Rent inches upward without pause, school fees arrive with annual revisions, healthcare costs rarely retreat, and a growing list of small but unavoidable digital payments — from data plans to streaming subscriptions — quietly reshapes monthly spending. The tension between official inflation numbers and everyday financial strain is not merely perception. It reflects a deeper structural mismatch between what is measured and what matters most in contemporary household budgets.
For years, India’s primary inflation gauge, the Consumer Price Index (CPI), relied on consumption patterns anchored to 2012. At that time, food dominated household expenditure, and services occupied a much smaller share of spending. The economy has since undergone a profound shift. Rapid urbanisation, rising incomes, and changing aspirations have expanded the role of services in daily life. Housing, transport, healthcare, education, and communication now command a larger portion of household budgets than they did a decade ago. Yet inflation measurement continued to reflect an older economic reality. The result was not inaccurate data, but an incomplete representation — a statistical mirror that lagged behind the society it was meant to reflect.
This lag had tangible consequences. Volatile food prices often exerted disproportionate influence on the headline inflation figure. When food inflation eased, the overall number appeared subdued, even as households grappled with steady increases in rent, hospital bills, tuition fees, and transport costs. For families whose budgets are dominated by these recurring expenses, inflation felt persistently high despite reassuring data. Recognising this gap, India introduced a new CPI series in early 2026, using 2024 as the base year and drawing on the Household Consumption Expenditure Survey of 2023–24. This shift is more than a technical recalibration; it represents an attempt to align inflation measurement with the realities of modern consumption.
The updated CPI reflects a contemporary consumption basket. Obsolete items from a bygone era — such as cassette players or VCRs — have been replaced with expenses that define present-day life, including digital services, value-added food products, childcare support, and rural housing costs. The basket has expanded from 299 to 358 items, and the weights assigned to categories have been rebalanced to reflect current spending patterns. Housing, healthcare, education, and transport now carry greater influence in shaping the inflation figure. India has also adopted the international COICOP classification system, expanding inflation tracking from six broad groups to 12 clearly defined divisions. This shift enhances transparency, ensures that recurring expenses are not buried within larger categories, and allows for a more meaningful comparison with global inflation data.
Equally significant is the evolution in how price data is collected. Traditional market surveys are now complemented by digital tools, online price tracking, and administrative records, capturing the ways Indians actually shop and pay in a hybrid physical–digital economy. This methodological shift is likely to produce inflation readings that feel less erratic and more familiar. Sudden spikes in food prices may no longer swing the headline figure as dramatically, while steady increases in services — such as rent, healthcare, and education — will exert greater influence. Recent inflation readings hovering around 2.7 per cent in both rural and urban areas reflect this recalibration, though the true test will lie in whether households perceive the numbers as more credible.
Inflation will never feel uniform. A family burdened by rising school fees and rent will experience price pressures differently from one whose spending centres on food and fuel. No statistical framework can capture every nuance of lived experience. Yet by updating the base year, expanding the consumption basket, rebalancing category weights, adopting global standards, and modernising data collection, India has taken a meaningful step toward measuring inflation in a way that resonates with everyday life. The next time inflation is declared “under control,” the claim may carry greater legitimacy — not because prices have stopped rising, but because the way we measure them has finally begun to reflect the true cost of living in a changing India.